DON'T FORGET ABOUT THE 203K LOANS!

Tis the time of vast foreclosure opportunities. Since most of these properties needs some fixing, don't forget about this little-known loan program for fixer-uppers.


Home buyers thinking of purchasing a distressed property in need of repair, but who are concerned that the cost of the repairs could drain their savings account may qualify for the Federal Housing Administration’s (FHA) 203(k) rehabilitation program.

KEEP THIS IN MIND

• The FHA’s 203(k) rehabilitation program provides loans for covering renovation costs as well as the purchase price of the primary residence. Investors are not eligible for this program. Additionally, similar to traditional FHA loan programs, the rehab program allows for a down payment of as little as 3.5 percent.

• A common misperception about the program is that the house needs to be unlivable. Realistically, the property just needs to be outdated, according to a lender familiar with the program. The property “just has to appraise below market value and then at market value with the repairs.”

• Improvements deemed “luxury” are ineligible; however, the program has a wide range of definitions for “repairs” and “modernization.” Covered repairs include items such as a new roof or heating system, as well as decorative changes, like replacing vinyl with ceramic tile on the kitchen floor or painting the interior.

• In addition to putting down at least 3.5 percent of the current value of the property, buyers also must use a HUD-approved lender, appraiser, and a contractor approved by the lender for the repairs. One list of approved businesses can be found at 203kcontractors.com.

• Borrowers considering the FHA rehab loan program should be aware that loan rates typically run around a percentage point higher than conventional loans, and come in 15- to 30-year terms, either fixed or adjustable. Additional paperwork for inspection, appraisal, title updating, and the like can increase closing costs by $1,000 or more higher than the average.

• For additional information about the FHA 203(k) rehabilitation program, please visit HUD 203K INFO

So if you're looking at a good buying opportunity but worried about how to find the money to fix it up, this is a great program for you.  Call me with any questions.  I have access to 203K approved contractors and lenders for this program.  It's worth your time to investigate the possibilities. 

Call Charlie, your friend in the Neighborhood with all your real estate questions.  If we don't have the answer, we'll find it for you!

OWE MORE ON YOUR HOME THAN IT'S WORTH? GOOD NEWS!

If you owe more on your home than it's worth, I have some good news for you! No Short Sale Deficiencies: Starting January 1, 2011, a seller's first trust deed lender cannot obtain a deficiency judgment against the seller after a short sale. Providing written consent to a short sale shall obligate the first trust deed lender to accept the sales proceeds as full payment and discharge of the remaining amount owed on the loan. This law applies to first trust deeds secured by one-to-four residential units, but does not limit the lender from seeking damages for fraud or waste by the borrower. Senate Bill 931. Governor Schwarzenegger vetoed Senate Bill 1178, our sponsored bill, which would have extended California's anti-deficiency protection to refinance loans.

If you owe more than your home home is worth and don't know what to do, call me, I can help! You can also check out my Short Sale Website for answers to some common questions in today's market.

As we near the Holiday season for 2010, please start thinking about ways to help some of our South Bay families in need this year. Although we are blessed to have fewer foreclosures and homeless families than most areas in the county, we still have friends and neighbors in need. If you have a request for your neighbor or friend, let me know. We are starting to collect Holiday Gifts for kids and food bank supplies for families. If you can contribute, please call and I will pick up. If you or a friend or neighbor needs help please let us know. We are here to support our community in any way we can!